Changing of the Guard: The Commoditization of Sportscards

[TanksAndSpartans]

Tennis13 touched on one of the things I was thinking, but articulated it better.

Say you quietly buy 5 PSA 8 cards over the course of a year (say Jim Brown rookies just as an example)

I'll use round numbers:

5*6K=30K

Then suddenly collude with someone to run an auction up to 17K

You now have 6 cards at a cost of 30K + 17K = 47K

The hope would be that 17K price acts a signal or whatever and the card gets hot. Even if the 6 are now sold over time, some auctioned off or however at 10K each (a bargain relative to the 17K price), you have:

6*10K=60K-47K=13K profit

[Tennis13]

Originally Posted by TanksAndSpartans

Tennis13 touched on one of the things I was thinking, but articulated it better.

Say you quietly buy 5 PSA 8 cards over the course of a year (say Jim Brown rookies just as an example)

I'll use round numbers:

5*6K=30K

Then suddenly collude with someone to run an auction up to 17K

You now have 6 cards at a cost of 30K + 17K = 47K

The hope would be that 17K price acts a signal or whatever and the card gets hot. Even if the 6 are now sold over time, some auctioned off or however at 10K each (a bargain relative to the 17K price), you have:

6*10K=60K-47K=13K profit

So let's be real methodical here. All possible winners in this situation:

1). You corner market and outbid a few people that JUST MISS over and over. You have identified the buyers. Now pull the cards off market for 18 months or 24 months. Whatever. Or better (illegaly) yet, keep bid rigging so that guy keeps just barely missing out. Then Finally after he has been outbid and hasn't seen his big card for 18 months, you relist, see him chase and overpay. To get your sort of economics outlined above. Because you have cornered the market, you can release at whatever speed you want and control the supply. Contrived scarcity.

2). Card graders are charging by value. If i own a $100 million dollar company and spend $500k to generate 20% or 25% higher grading revs per year due to increased market value, AND I get to personally hold an "asset" in a card, well that's a leveraged win-win situation. Nothing illegal here, but definitely higher risk for ruin by leveraging yourself to same industry.

3). I am an auction house. I take a percentage of gross sales. I have indicated sellers, and I am trying to get them off the fence. I point to specific cards/auctions/factors that allow me to auction your card off and max your value. This would be a very legal, big data approach that would be really awesome to try to pull off. Let's build a regression off every possible sale we have from last 15 years and try to predict the factors that maximize card values. And if we have to buy a few to put it to the test, to strum up interest, nothing wrong with that.


Those are the only 3 possibilities I see for a sort of "ulterior" motive to prices going higher. None of which are illegal, unless there is collusion on #1. But cornering the market is not illegal if you do it alone, and it's often ruinous long-term.

I don't think any of the above 3 scenarios are very likely, because 1&3 are a high risk of ruin. Scenario 2 is possible, but I don't think those guys are rich enough to actually do what you all think is happening. My hunch is there are a handful of rich tech/hedge fund dudes that are in an arms race with each other, and these prices are rounding errors to billionaires, and they are just buying everything they never could buy growing up.

Never underestimate bored billionaires. Ballmer paid $2 billion+ for the Clippers because he needed something to do. $100,000 for a baseball card: big deal.

[1952boyntoncollector]

Originally Posted by Tennis13

So let's be real methodical here. All possible winners in this situation:

1). You corner market and outbid a few people that JUST MISS over and over. You have identified the buyers. Now pull the cards off market for 18 months or 24 months. Whatever. Or better (illegaly) yet, keep bid rigging so that guy keeps just barely missing out. Then Finally after he has been outbid and hasn't seen his big card for 18 months, you relist, see him chase and overpay. To get your sort of economics outlined above. Because you have cornered the market, you can release at whatever speed you want and control the supply. Contrived scarcity.

2). Card graders are charging by value. If i own a $100 million dollar company and spend $500k to generate 20% or 25% higher grading revs per year due to increased market value, AND I get to personally hold an "asset" in a card, well that's a leveraged win-win situation. Nothing illegal here, but definitely higher risk for ruin by leveraging yourself to same industry.

3). I am an auction house. I take a percentage of gross sales. I have indicated sellers, and I am trying to get them off the fence. I point to specific cards/auctions/factors that allow me to auction your card off and max your value. This would be a very legal, big data approach that would be really awesome to try to pull off. Let's build a regression off every possible sale we have from last 15 years and try to predict the factors that maximize card values. And if we have to buy a few to put it to the test, to strum up interest, nothing wrong with that.


Those are the only 3 possibilities I see for a sort of "ulterior" motive to prices going higher. None of which are illegal, unless there is collusion on #1. But cornering the market is not illegal if you do it alone, and it's often ruinous long-term.

I don't think any of the above 3 scenarios are very likely, because 1&3 are a high risk of ruin. Scenario 2 is possible, but I don't think those guys are rich enough to actually do what you all think is happening. My hunch is there are a handful of rich tech/hedge fund dudes that are in an arms race with each other, and these prices are rounding errors to billionaires, and they are just buying everything they never could buy growing up.

Never underestimate bored billionaires. Ballmer paid $2 billion+ for the Clippers because he needed something to do. $100,000 for a baseball card: big deal.

I know i have paid 40 bucks for a card that i know others would say should sell for 20 bucks but i didnt care because its 40 bucks.....for some 8k to them is 40 bucks to us..

[Billy5858]

Originally Posted by 1952boyntoncollector

I know i have paid 40 bucks for a card that i know others would say should sell for 20 bucks but i didnt care because its 40 bucks.....for some 8k to them is 40 bucks to us..

+1 This makes the most sense to me.
Billionaires that are not trying to corner
the market and make money. But billionaires
who are just buying because they CAN so
they do. Trophy cards to show their billionaire
friends just for the heck of it.

[bnorth]

Market manipulation in baseball cards is super easy, I see it happen all the time, sometimes on purpose and sometimes by accident. Just go to a forum or a few forums hype the crap out of something. Get a few people to help and bingo a nice return on investment.

On this forum you don't have to look farther than MattyC to understand how it works. His constant posts about perfect centering had a affect on card prices. I don't know if he just liked centered cards or if he was flipping them to make $ but his posts did affect prices.

[packs]

Today I traded futures on a kid named Sammy Benign from Oxford, MS. He was born today but I commodified his future cards and turned them into 12 barrels of oil and 6 ounces of silver.

[TanksAndSpartans]

I know who owns the famous T206 Wagner, but I'm a little skeptical that some billionares have recently entered the market. Its just a casual observation, but sometimes the wealthiest people are also the thriftiest. I actually do have second hand knowledge of someone who was doing well financially and put together a significant collection, but it was memorabilia - one of a kind items in some cases, game used, etc. stuff you can display like a trophy - conversation pieces. In my opinion, the average huge sports fan walking into your house - you'd have to explain what the little 9 or 10 means on the piece of paper above the card. If you have a bat that was used to hit a game winning world series home run or something, not much explanation is needed.

And who wins the big eBay auctions? The ones I checked, the eBay user ids have feedback scores way higher then mine - it takes time to build that up.